Time Warner Cable Putting More Bandwidth Hogs On A Diet

Dan Frommer

Apr. 1, 2009, 9:45 AM

Time Warner Cable, the second-largest U.S. cable company, is rolling out its Internet bandwidth caps and overage charges into more markets. This means that your cable Internet subscription will work more like your cellphone plan: Once your downloads and uploads hit the limit, you will have to pay extra -- potentially $100 or more extra, depending on how much Web video you consume.

The changes come as cable companies look for more sources for growth -- most people who are going to sign up for cable have already done so -- and new ways to profit off Web video, which could disrupt the cable companies' main TV businesses.

Plans will range from $30 to $55 per month, depending on the cap -- 5 GB, 10 GB, 20 GB, and 40 GB caps are available, with a $1 per GB overage charge, according to BusinessWeek. Those caps are very low compared to rival Comcast's (CMCSA) 250 GB cap. No word if Time Warner Cable's forthcoming Web video service will count toward its caps. Update: TWC tells us it'll test a 100 GB plan, too.

What does this mean for you? If you watch about 7 hours a week of standard-def video, or 2.5 hours a week of hi-def Web video, you could easily pass even the 40 GB cap. After that, each iTunes movie rental -- or Netflix (NFLX) stream, or whatever -- could cost $1 to $4 more. Or Hulu episodes could cost $0.30 to $0.50. That doesn't even include your other Web usage, such as downloading music, using the Web, etc.

This summer, Time Warner will roll out consumption-based billing in San Antonio and Austin, Texas, and Rochester, N.Y., BusinessWeek reports. (It's been testing the plans in Beaumont, Tex. since last year.) It'll happen sooner in Greensboro, N.C.

We'll see if Time Warner Cable is able to expand this into more, bigger markets. If it works -- and Web video fanatics don't mind spending $200 per month on Internet service -- that's good news for Internet providers.

But if subscribers bolt in big numbers for competitors like Verizon (VZ), which doesn't currently cap bandwidth, it could be a disaster. (More likely: It will have to bump caps up to a more reasonable 150 GB or more when customers revolt at $100-plus cable modem bills.)